Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I had a LL.M Taxation. I needed only to don my cape…. taxgirl® was born. Today, I live and work in Philadelphia, PA, one of the best cities in the world (I can't even complain about the sports teams these days). I landed in the City of Brotherly Love by way of Temple University School of Law. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. I even took the lead on a successful audit. At audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax.

English: A picture of Lvivske beer served at a restaurant in L'viv, Ukraine. (Photo credit: Wikipedia)

Hold on to your CarlsbergCarlsberg: it’s about to get a lot more expensive to drink a pint in the Ukraine.

Ukraine, which is the largest country wholly in Europe, borders Russia and Poland. At the turn of the 19th century, the country was poor and largely ignored by its bordering countries. Conflicts within Europe following World War I consumed Ukraine and it was eventually swallowed up by the Soviet Union. Ukraine remained a part of the Soviet Union for nearly 70 years; it won independence after the Soviet Union dissolved in 1991.

The combination of imports, exports and increased sales also makes appealing statistics for tax purposes: in an effort to boost revenues, Ukraine plans to almost triple the excise tax on beer. Ukraine, which is seeking a bailout from the International Monetary Fund (IMF) needs to demonstrate that it can increase revenues: increasing the tax on beer appears to their answer.

Today, the leading breweries in Ukraine include Carlsberg A/S (which now markets the centuries old regional brew, Lvivske), Obolon CJSC and Anheuser-Busch InBevAnheuser-Busch InBev (which does market local brews Chernihivske and Rohan, in addition to what you’d expect). If you’re not familiar with Ukrainian beers, the most popular styles of beer in the country tend to be similar to Czech beers.

Breweries and beer marketers clearly oppose the planned hike which will initially boost tax to 2.43 hryvnia ($.30 US) per liter; according to UkrPivo, that will boost the price of each bottle of beer by 3 hryvnia ($.37 US). The number could grow even higher depending on the initial reaction to the tax. Revenues from the tax are expected to hit 4 billion hryvnia ($494 million US).

Beer has traditionally not been taxed heavily in the country. It’s treated not so much like an alcoholic drink but like a soft drink. They’re cheap to buy and can be purchased at kiosks. Even more surprising? While you have to be 18 to grab a vodka in Ukraine, there is no minimum age to buy beer. Anti-drinking forces in the country believe that the lax laws and low taxes are contributing to alcoholism inside the country. Tax increases could, they believe, slow that trend.

The worry is, of course, that the tax increase may cause the beer market to shrink. Analysts have suggested the decrease could be as much as 10% to 25% which would result in an overall decline in taxes received. That’s a real worry, of course. Excise taxes, like those on alcohol, are sometimes referred to as luxury taxes or sin taxes, since the taxes are often on products that taxpayers don’t “need” in the conventional sense. The choice to boost those taxes results in a dilemma. In theory, the higher the tax, the less likely the taxpayer is to engage in the behavior. But if the tax “works” – that is, the behavior that it’s intended to tax actually slows or is eliminated – the revenue stream potentially disappears.

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As an aside, we don’t grab pictures from Wiki: even though the credits on this one says Wikipedia, it’s through an approved image gallery and not a screen grab (the lawyers would have a fit otherwise).

Kelly, There is a drinking age for beer in Ukraine despite the blog info you referenced(see link below). It is 18 and since most beer is above 3.o% it is legally considered alcohol, despite the average persons belief that it is not serious alcohol.

Kelly, would love to get your take on the Ukraine tax system. Here is the best info on drinking laws in Ukraine with respect to underage drinking: 1. Beer is Alcohol: As you already know beer is taxed along with alcoholic soft drinks in the category of “alcoholic beverages”. http://zakon1.rada.gov.ua/laws/show/1956-98-%D0%BF 2. underage consumption is illegal without guardians consent: There is a massive alcohol abuse problem and many don’t view beer as “alcohol” but the law does. Many drug and alcohol awareness groups have pushed for the enforcement of laws at all stores. Proof: This article lists the prosecution of underage drinkers in Rivne this year. The laws are stated in the article. http://4vlada.com/rivne/21942 Beer is included in the prohibition. 3. Law is clarified: Also in January 21, 2010 the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to restrict the sale and consumption of beer and soft drinks,” which complemented the Law of Ukraine “On state regulation of production and turnover of ethyl, cognac and fruit, alcoholic beverages and tobacco products “some new provisions. Article 18 of the Act establishes a number of persons and places can not be made selling beer, alcoholic, alcoholic drinks and tobacco. Sale and purchase of such products can not be operated by persons under 18 years of age. http://zakon1.rada.gov.ua/laws/show/854-96-%D0%BF So, the law is clear but the application and understanding if often far more foggy. Thanks again for highlighting the proposed fleecing of the great beer companies in Ukraine. Keep up the tax fight.

Just what a recession needs – more taxes- Why not tax the Vodka- I drink Bud so… How about fixing the roads with the Tax money – worst set of roads I’ve ever had to drive on. The Soviet Union took care of the roads- granted there were hardly any cars back then – light and slow Ladas,IZH etc. — If there is one thing that Ukraine needs from the west – Gov. Systems– as a Dept. of Transportation and Dept. of Motor Vehicles etc.